Orchid-PBM
Smartcontract repository for Project Orchid PBM.
Programmable payment refers to the automatic execution of payments once a pre-defined set of conditions are met. For example, daily spending limits or recurring payments could be defined, similar to direct debits and standing orders. Programmable payments are commonly implemented through setting up database triggers or in the form of Application Programming Interface (API) gateways that sits between the accounting ledger and the client application. These programming interfaces interact with traditional ledgers and adjust bank account balances based on programmed logic.
Programmable money refers to the possibility of embedding rules within the medium of exchange itself that defines or constraints its usage. For example, rules could be defined such that the medium of exchange could be denominated in fractional units of up to eighteenth decimal places. Programmable money implementations include tokenised deposits and CBDCs. Unlike programmable payment, whereby the programming logic and the value itself are decoupled, programmable money is self-contained and contains both programming logic and serves as a store of value. When it has been transferred to another party, the logic and rules are moved as well.
Programmable payment’s advantage is its ability to define a set of programming logic or conditions that could be applied across a variety of different forms of money. Meanwhile, programmable money has the advantage of being self-contained and transferrable on a peer-to-peer basis between parties. A third model – Purpose Bound Money (PBM), which is explored in the initial phase of MAS’ Project Orchid, builds upon the concept and capabilities of both programmable payment and programmable money. PBM refers to a protocol that specifies the conditions upon which an underlying digital currency can be used. PBMs are bearer instruments, with self-contained programming logic and transferrable between two parties without intermediaries.
A crucial aspect of PBM is that the underlying digital medium of exchange bound within it comes embedded with programmable logic that makes it possible for use across different platforms and systems. For example, PBMs could be used to digitalise vouchers. A voucher comes with it a predefined set of conditions for its usage. The holder of the voucher can present it to participating merchants in exchange for goods or services (a programmable payment feature). In some instances, the terms of the voucher scheme allow it to be transferrable between people (a programmable money feature). Hence, a consumer could purchase a gift voucher and transfer it to another person who may then use it at a participating merchant. Vouchers could also be issued to support government disbursement programmes. For example, in Singapore, government vouchers, designed to defray the cost of living and support hawkers and heartland merchants affected by the pandemic, are distributed to eligible household, and programmed to be spent at merchants in the heartlands.
Components
The PBM is comprised of two main components: a wrapper that defines the intended use, and an underlying store of value, that serves as collateral. This design allows for existing digital currency to be deployed for different purposes without altering its native property. Once the digital currency has been utilised for its intended purposes, the digital currency can be used without any conditions or constraints. The digital currency issuer retains control over the digital currency, preventing fragmentation and ensuring easy maintenance.